A really Awesome Company produces two pain relievers, premium & regular, through a joint process. Joint costs amount to $12,000 per batch of output. Each batch totals 10,000 grams: 60% premium and 40% regular. The drugs could be sold bulk at the splitoff point : $2,000/kg for Premium and $1,200/kg for Regular. Both products can be processed further, (packaged for retail in 10 gram packets) though there is a 10% loss of product in the process. Processing/ packaging costs $6.00 per package for each product. Packaged product sells for $30 (Premium) and $15 (Regular) per package. The company has never had a Controller before and managers don't understand what cost allocations do or why we would do that. Briefly explain

A)Allocate the joint costs according to the physical output method.

B) Allocate the joint costs according to the net realizable value method. C) Allocate the joint costs according to the constant gross margin NRV method. D) Explain the advantages and disadvantages of each method, including the reactions of the product line managers

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